Department of Economics & Center for Economic History, Northwestern University

Date Written: December 31, 2014

Abstract

We study why China suddenly exhibited a large surge in births -- a 50% increase in 2000 relative to 1999 -- in the 2000 Year of the Dragon by disaggregating birth rates at the city level. We define the dragon effect as a relative jump in birth rates compared to the trend. Prior to 2000, Asian nations with large numbers of ethnic Chinese -- but not China -- exhibited strong dragon year effects. We exploit the uneven economic growth of regions in China to understand the emergence of the dragon effect. We find that the dragon effect was most pronounced in rapidly developing cities having higher incomes, higher average education, and greater employment prospects as proxied by the share of non-local residents. Our main findings at the city level are supported by our micro-level analysis, where we show the dragon effect to be strongly correlated with educational attainment of family members and membership in a multi-generational household.

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